Requiring restaurants to pay servers and bartenders the full minimum wage may not deliver the compensation advantages touted by opponents of a tip credit, a new study suggests.
The report ranked the five best and worst states for tipped employees to work, based on a combination of the wages employers are mandated to pay the workers and the typical percentages restaurant customers add to their bills as a gratuity for the staff. Only one of the five best states, Minnesota, does not allow restaurants to count servers’ tips as a portion of the minimum wages the staffers are due.
The state, one of only seven that don’t currently have a tip credit on the books, was ranked No. 5, with servers there typically collecting $7.87 an hour directly from their employers and tips averaging 17.57% of customers’ bills.
Included among the other four are Maine, where a tip credit was scuttled by voters in a 2016 ballot referendum, then reinstated last year after servers in the state formed a group to lobby for restoring it. Members of the group, which has since become a national lobbying force called Restaurant Workers of America, complained that their incomes declined; many customers stopped tipping, presuming the servers were paid a handsome salary because of the rule change, and the higher wages paid by employers failed to offset the decline in gratuities.
The new study, “The Best and Worst States to be a Tipped Worker,” found that waiters, waitresses and bartenders in Maine are now collecting gratuities averaging 19.36% of customers’ tabs, in addition to the $5 an hour that employers are mandated to pay them directly. The combination earned the state the second slot on the ranking of the best places for servers to work.
Best and worst states for tipped employees
The No. 1 slot went to Connecticut, where restaurants and other employers are obliged to pay tipped employees at least $10.10 an hour, considerably more than the $2.13 mandated by the federal government as the minimum for employees who are customarily left a gratuity. On top of that wage, servers there tend to collect tips equal to 18.58% of customers’ tabs.
The worst state for tipped workers is Tennessee, according to the study, which found consumers there tend to leave a tip of 16.38%. The minimum wage required of employers for servers is $2.13.
Rounding out the worst workplaces for tip earners, in ascending order, were Wisconsin, Nebraska, North Carolina and Wyoming. All but Wisconsin require employers to pay servers a minimum of $2.13 an hour, regardless of their tips. Wisconsin mandates $2.33.
The report was based on interviews with 208 consumers in each of the 50 states. The research was conducted for TSheets, a division of Intuit that sells employee scheduling and tracking software.
It was released amid a push by union-backed groups such as One Fair Wage to overturn the tip credit of the 43 states that allow restaurants to count tips as a portion of servers’ minimum compensation levels. The advocates recently succeeded in their demands that an initiative to overturn Michigan’s tip credit be included on the state’s ballot in November. They also scored a victory with the June decision by voters in Washington, D.C., to overturn that jurisdiction’s tip credit.
A recommendation to overturn New York’s tip credit is expected to be delivered to Gov. Andrew Cuomo in the next few weeks.
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